Due to climate change concerns, governments and consumers are demanding higher environmental accountability for transportation fuels, particularly as related to carbon emissions. Additionally, the U.S. policymakers are seeking renewable alternatives to enhance energy security, reduce oil price volatility and increase rural economic development opportunities. Such factors present an emerging market opportunity for lignocellulosic materials to be used as biofuels. But this oppiortunity also has a number of associated challenges, particularly in terms of scaling up. This paper offers a comprehensive review of the emerging biofuels sector in the U.S. It begins with first generation corn-grain ethanol and biodiesel, today's most widely available biofuels within the U.S. The paper argues that further growth of these biofuels may be limited by the "blend wall", the "food-versus-fuel" debate, and land use change inssues. As a result, industrial, governmental and academic research interests have shifted to second and third generation biofuels produced from lignocellulosic biomass and algae to address GHG emissions, land use change, and the food-fuel issue. We outline that there are several limitations in scalingup these hydrocarbon drop-in biofuels which include feedstock costs and availability, high production and capital costs, policy uncertainty, and various technical, environmental and social issues. Overall, this paper synthesizes the extant literature and draws on secondary sources to present a comprehensive and current inventory of existing U.S. biofuel players and a thorough review of the U.S. biofuels industry.